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Dean Garyet: Un-privatize tax lien collections

Posted:
03/30/2016 07:25:25 PM MDT

Julie Kreutzer ("Just what do we want from government?" Daily Camera, March 20) compellingly argues for the legitimacy of property taxes to fund local government services. The sad case of Robert McHugh, who lost his mobile home over an unpaid property tax bill of $175, doesn't lessen this argument. A government that we grant the power to tax must enforce penalties when people don't pay. Because enforcement has been privatized, though, individuals can profit from penalties imposed by the state. It's tragic that Mr. McHugh lost his home. He had the same obligation as the rest of us to pay, but his penalty was completely out of proportion; it's outrageous that a savvy investor profited.

Purchasing a tax lien is essentially a loan to the government. Other loans to the government are secured only by the government's power to tax, but for some unfathomable reason these loans are secured by the homeowner's property.

A fairer alternative would be for the lien to just collect interest (set at stiff enough levels to prevent abuse of the system) until the sale or transfer of the property, when the government could collect its due. Confiscation would be a reasonable and just penalty if the cumulative amount owed ever exceeded the property value. That way, the government gets only what it is entitled.

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Eliminating the privatization of tax collection would also allow the government to link delinquent payers to social services and other support systems in situations such as Mr. McHugh's, who apparently had a strong network of friends who would have covered his tax bill if they had known about it. Instead, the incentive in the current system is for those who purchase liens, like Julie Carpenter, to hope against payment of the delinquent tax so that they can realize a huge and unjustified return on their investment.

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